COVER SHEET. Company Name C e b u A i r, I n c. a n d S u b s i d i a r i e

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1 COVER SHEET SEC Registration Number Company Name C e b u A i r, I n c. a n d S u b s i d i a r i e s Principal Office (No./Street/Barangay/City/Town/Province) 2 n d F l o o r, D o ñ a J u a n i t a M a r q u e z L i m B u i l d i n g, O s m e ñ a B o u l e v a r d, C e b u C i t y Form Type Department requiring the report Secondary License Type, If Applicable Q COMPANY INFORMATION Company s Address Company s Telephone Number/s Mobile Number N/A (632) N/A No. of Stockholders Annual Meeting Month/Day Fiscal Year Month/Day 95 06/26 12/31 CONTACT PERSON INFORMATION The designated contact person MUST be an Officer of the Corporation Name of Contact Person Address Telephone Number/s Mobile Number Robin C. Dui Robin.Dui@cebupacificair.com (632) N/A Contact Person s Address Cebu Pacific Building, Domestic Road, Barangay 191, Zone 20, Pasay City 1301, Philippines Note: In case of death, resignation or cessation of office of the officer designated as contact person, such incident shall be reported to the Commission within thirty (30) calendar days from the occurrence thereof with information and complete contact details of the new contact person designated.

2 - 2 - SECURITIES AND EXCHANGE COMMISSION SEC FORM 17-Q QUARTERLY REPORT PURSUANT TO SECTION 17 OF THE SECURITIES REGULATION CODE AND SRC RULE 17(2)(b) THEREUNDER 1. For the quarterly period ended September 30, SEC Identification No BIR Tax Identification No Cebu Air, Inc. 4. Exact name of issuer as specified in its charter Cebu City, Philippines 5. Province, country or other jurisdiction of incorporation or organization 6. Industry Classification Code: (SEC Use Only) 2 nd Floor, Doña Juanita Marquez Lim Building, Osmena Blvd., Cebu City Address of issuer's principal office Postal Code (632) Issuer's telephone number, including area code Not Applicable 9. Former name, former address and former fiscal year, if changed since last report 10. Securities registered pursuant to Sections 8 and 12 of the Code, or Sections 4 and 8 of the RSA Number of Shares of Common Stock Outstanding and Amount Title of Each Class of Debt Outstanding Common Stock, P1.00 Par Value 605,953,330 shares 11. Are any or all of the securities listed on the Philippine Stock Exchange? Yes [x] No [ ] 12. Indicate by check mark whether the registrant: (a) has filed all reports required to be filed by Section 17 of the Code and SRC Rule 17 thereunder or Sections 11 of the RSA and RSA Rule 11(a)-1 thereunder, and Sections 26 and 141 of the Corporation Code of the Philippines, during the preceding twelve (12) months (or for such shorter period the registrant was required to file such reports) Yes [x] No [ ] (b) has been subject to such filing requirements for the past 90 days. Yes [x] No [ ]

3 - 3 - PART I FINANCIAL INFORMATION Item 1. Financial Statements The unaudited consolidated financial statements are filed as part of this Form 17-Q. Item 2. Management s Discussion and Analysis of Financial Condition and Results of Operations Cebu Air, Inc. (the Parent Company) is an airline that operates under the trade name Cebu Pacific Air and is the leading low-cost carrier in the Philippines. It pioneered the low fare, great value strategy in the local aviation industry by providing scheduled air travel services targeted to passengers who are willing to forego extras for fares that are typically lower than those offered by traditional full-service airlines while offering reliable services and providing passengers with a fun travel experience. The Parent Company was incorporated on August 26, 1988 and was granted a 40-year legislative franchise to operate international and domestic air transport services in It commenced its scheduled passenger operations in 1996 with its first domestic flight from Manila to Cebu. In 1997, it was granted the status as an official Philippine carrier to operate international services by the Office of the President of the Philippines pursuant to Executive Order (EO) No International operations began in 2001 with flights from Manila to Hong Kong. In 2005, the Parent Company adopted the low-cost carrier (LCC) business model. The core element of the LCC strategy is to offer affordable air services to passengers. This is achieved by having: high-load, high-frequency flights; high aircraft utilization; a young and simple fleet composition; and low distribution costs. The Parent Company s common stock was listed with the Philippine Stock Exchange (PSE) on October 26, 2010, the Company s initial public offering (IPO). The Parent Company has twelve special purpose entities (SPE) that it controls, namely: Cebu Aircraft Leasing Limited, IBON Leasing Limited, Boracay Leasing Limited, Surigao Leasing Limited, Sharp Aircraft Leasing Limited, Vector Aircraft Leasing Limited, Panatag One Aircraft Leasing Limited, Panatag Two Aircraft Leasing Limited, Panatag Three Aircraft Leasing Limited, Summit A Aircraft Leasing Limited, Summit B Aircraft Leasing Limited and Summit C Aircraft Leasing Limited. On March 20, 2014, the Parent Company acquired 100% ownership of Tiger Airways Philippines (TAP), including 40% stake in Roar Aviation II Pte. Ltd. (Roar II), a wholly owned subsidiary of Tiger Airways Holdings Limited (TAH). The Parent Company, its twelve SPEs and Tiger Airways Philippines (collectively known as the Group ) are consolidated for financial reporting purposes. As of September 30, 2015, the Group operates an extensive route network serving 56 domestic routes and 37 international routes with a total of 2,530 scheduled weekly flights. It operates from seven hubs, including the Ninoy Aquino International Airport (NAIA) Terminal 3 and Terminal 4 both located in Pasay City, Metro Manila; Mactan-Cebu International Airport located in Lapu- Lapu City, part of Metropolitan Cebu; Diosdado Macapagal International Airport (DMIA) located in Clark, Pampanga; Davao International Airport located in Davao City, Davao del Sur; Ilo-ilo International Airport located in Ilo-ilo City, regional center of the western Visayas region; and Kalibo International Airport in Kalibo, Aklan. As of September 30, 2015, the Group operates a fleet of 55 aircraft which comprises of 9 Airbus A319, 32 Airbus A320, 6 Airbus A330 and 8 ATR aircraft. It operates its Airbus aircraft on both domestic and international routes and operates the ATR aircraft on domestic

4 - 4 - routes, including destinations with runway limitations. The average aircraft age of the Group s fleet is approximately 4.73 years as of September 30, The Group has three principal distribution channels: the internet; direct sales through booking sales offices, call centers and government/corporate client accounts; and third-party sales outlets. Aside from passenger service, it also provides airport-to-airport cargo services on its domestic and international routes. In addition, the Group offers ancillary services such as cancellation and rebooking options, in-flight merchandising such as sale of duty-free products on international flights, baggage and travel-related products and services. Results of Operations Nine Months Ended September 30, 2015 Versus September 30, 2014 Revenues The Group generated revenues of P= billion for the nine months ended September 30, 2015, 9.9% higher than the P= billion revenues earned in the same period last year. Growth in revenues is accounted for as follows: Passenger Passenger revenues grew by P=2.401 billion or 8.1% to P= billion in the nine months ended September 30, 2015 from P= billion posted in the nine months ended September 30, This increase was mainly attributable to the 9.0% increase in passenger volume to million from million in 2014 driven by the increased number of flights in Number of flights went up by 9.8% year on year as the Group added more aircraft to its fleet, particularly, its acquisition of wide-body Airbus A330 aircraft with a configuration of more than 400 all-economy class seats. The number of aircraft increased from 51 aircraft as of September 30, 2014 to 55 aircraft as of September 30, The slight decrease in average fares by 0.8% to P=2,353 for the nine months ended September 30, 2015 from P=2,372 for the same period last year partially offset the increase in revenues. Cargo Cargo revenues grew by P million or 10.2 % to P2.488 billion for the nine months ended September 30, 2015 from P2.258 billion for the nine months ended September 30, 2014 following the increase in the volume of cargo transported in Ancillary Ancillary revenues went up by P=1.182 billion or 18.3 % to P=7.645 billion in the nine months ended September 30, 2015 from P=6.463 billion registered in the same period last year consequent to the 9.0% increase in passenger traffic and 8.6% increase in average ancillary revenue per passenger. Improved online bookings, together with a wider range of ancillary revenue products and services, also contributed to the increase. Expenses The Group incurred operating expenses of P billion for the nine months ended September 30, 2015, slightly lower by 1.0% than the P billion operating expenses recorded for the nine months ended September 30, The decrease is attributable to the substantial reduction in fuel costs incurred for the nine months ended September 30, 2015 compared to the same period last year due to the sharp decline in global jet fuel prices. The drop in fuel costs, however, was offset by the increase in majority of the Group s operating expenses driven by its expanded long haul operations, growth in seat capacity from the acquisition of new aircraft and the weakening of the Philippine peso against the U.S. dollar as referenced by the depreciation of the Philippine peso to an average of P45.06 per U.S. dollar for the nine months ended September

5 - 5-30, 2015 from an average of P44.26 per U.S. dollar last year based on the Philippine Dealing and Exchange Corporation (PDEx) weighted average rates. Flying Operations Flying operations expenses decreased by P3.612 billion or 18.4% to P billion for the nine months ended September 30, 2015 from P billion incurred in the same period last year. This is primarily attributable to the 22.3% decline in aviation fuel expenses to P billion for the nine months ended September 30, 2015 from P billion for the same period last year consequent to the significant drop in jet fuel prices as referenced by the reduction in the average published fuel MOPS price of U.S. $68.13 per barrel in the nine months ended September 30, 2015 from U.S. $ per barrel in The drop in fuel prices, however, was partially offset by the weakening of the Philippine peso against the U.S. dollar as referenced by the depreciation of the Philippine peso to an average of P45.06 per U.S. dollar for the nine months ended September 30, 2015 from an average of P44.26 per U.S. dollar last year based on the Philippine Dealing and Exchange Corporation (PDEx) weighted average rates. Aircraft and Traffic Servicing Aircraft and traffic servicing expenses increased by P million or 22.3% to P4.276 billion for the nine months ended September 30, 2015 from P3.497 billion reported in the same period in 2014 as a result of the overall increase in the number of flights flown in Higher expenses were particularly attributable to more international flights operated for which airport and ground handling charges were generally higher compared to domestic flights. International flights increased by 7.0% year on year with the launch of long haul operations to Riyadh in the last quarter of 2014 and to Doha in June The weakening of the Philippine peso against the U.S. dollar as referenced by the depreciation of the Philippine peso to an average of P45.06 per U.S. dollar for the nine months ended September 30, 2015 from an average of P44.26 per U.S. dollar last year also contributed to the increase in international airport charges. Depreciation and Amortization Depreciation and amortization expenses grew by P million or 19.7% to P3.757 billion for the nine months ended September 30, 2015 from P3.138 billion for the nine months ended September 30, Depreciation and amortization expenses increased consequent to the arrival of two Airbus A320 aircraft during the last quarter of 2014 and three Airbus A320 aircraft in Repairs and Maintenance Repairs and maintenance expenses went up by 16.7% to P3.915 billion for the nine months ended September 30, 2015 from P3.355 billion posted in the nine months ended September 30, Increase was driven by the overall increase in the number of flights and the delivery of two Airbus A320 in the latter part of 2014 and three Airbus A320 and one Airbus A330 aircraft in 2015 partially offset by the return of one leased Airbus A320 aircraft in October Aircraft and Engine Lease Aircraft and engine lease expenses moved up by P million or 14.2% to P2.966 billion in the nine months ended September 30, 2015 from P2.597 billion charged for the nine months ended September 30, Increase in aircraft lease was due to the delivery of one Airbus A330 aircraft under operating lease in 2015 partially offset by the return of one leased Airbus A320 aircraft in October Reservation and Sales Reservation and sales expenses increased by P million or 24.6% to P1.993 billion for the nine months ended September 30, 2015 from P1.599 billion for the nine months ended September 30, This was primarily attributable to the increase in commission expenses and online bookings relative to the overall growth in passenger volume year on year.

6 - 6 - General and Administrative General and administrative expenses grew by P million or 30.0% to P1.207 billion for the nine months ended September 30, 2015 from P million incurred in the nine months ended September 30, Growth in general and administrative expenses was primarily attributable to the increased flight and passenger activity in Passenger Service Passenger service expenses went up by P million or 28.3% to P1.115 billion for the nine months ended September 30, 2015 from P million posted for the nine months ended September 30, This was primarily caused by additional cabin crew hired for the Airbus A320 and A330 aircraft acquired during the last quarter of 2014 and in 2015 and the increase in passenger food and supplies from pre-ordered meals being offered in international flights. Operating Income As a result of the foregoing, the Group finished with an operating income of P7.035 billion for the nine months ended September 30, 2015, 146.5% higher than the P2.854 billion operating income earned in the same period last year. Other Income (Expenses) Interest Income Interest income dropped by P1.622 million or 2.4% to P million for the nine months ended September 30, 2015 from P million earned in the same period last year due to lower interest rates for US dollar short-term placements. Hedging Gains (Losses) The Group incurred a hedging loss of P1.560 billion for the nine months ended September 30, 2015, an increase of % from hedging loss of P million in the same period last year as a result of lower mark-to-market valuation on fuel hedging positions consequent to the material decline in fuel prices in Foreign Exchange Gains (Losses) Net foreign exchange losses of P1.725 billion for the nine months ended September 30, 2015 resulted from the weakening of the Philippine peso against the U.S. dollar as referenced by the depreciation of the Philippine peso to P46.74 per U.S. dollar for the nine months ended September 30, 2015 from P44.72 per U.S. dollar for the twelve months ended December 31, 2014 based on PDEx closing rates. The Group s major exposure to foreign exchange rate fluctuations is in respect to U.S. dollar denominated long-term debt incurred in connection with aircraft acquisitions. Equity in Net Income (Loss) of Joint Venture The Group had equity in net loss of joint venture of P1.104 million for the nine months ended September 30, 2015, P million or 101.3% lower than the P million equity in net income of joint venture earned in the same period last year. The decrease was primarily due to the net loss from current operations incurred by Philippine Academy for Aviation Training, Inc. (PAAT) and SIA Engineering (Philippines) Corporation (SIAEP) in Interest Expense Interest expense increased by P million or 4.3% to P million for the nine months ended September 30, 2015 from P million in the nine months ended September 30, Increase was due to higher interest expense incurred brought by the additional loans availed to finance the acquisition of two Airbus A320 aircraft during the last quarter of 2014 and three Airbus A320 aircraft in 2015 coupled with the effect of the weakening of the Philippine peso against the U.S. dollar during the current period.

7 - 7 - Loss on sale of aircraft In September 2015, the Group sold and delivered one Airbus A319 aircraft to a subsidiary of Allegiant Travel Company which resulted to a loss of P million. Income before Income Tax As a result of the foregoing, the Group recorded income before income tax of P2.950 billion for the nine months ended September 30, 2015, higher by 54.1% or P1.036 billion than the P1.914 billion income before income tax posted for the nine months ended September 30, Benefit from Income Tax Benefit from income tax for the nine months ended September 30, 2015 amounted to P million, of which, P million pertains to provision for current income tax recognized as a result of the taxable income earned for the first three quarters of Benefit from deferred income tax amounted to P million resulting from the recognition of deferred tax assets on future deductible amounts during the period. Net Income Net income for the nine months ended September 30, 2015 amounted to P3.556 billion, an increase of 71.0% from the P2.079 billion net income earned in the same period last year. As of September 30, 2015, except as otherwise disclosed in the financial statements and to the best of the Group s knowledge and belief, there are no material off-balance sheet transactions, arrangements, obligations (including contingent obligations) and other relationships of the Group with unconsolidated entities or other persons created during the reporting period that would have a significant impact on the Group s operations and/or financial condition. Financial Position September 30, 2015 versus December 31, 2014 As of September 30, 2015 the Group s consolidated balance sheet remains solid, with net debt to equity of 1.29 [total debt after deducting cash and cash equivalents (including financial assets held-for-trading at fair value and available-for-sale assets) divided by total equity]. Consolidated assets grew to P billion from P billion as of December 31, 2014 as the Group added aircraft to its fleet. Equity grew to P= billion from P= billion in 2014, while book value per share amounted to P=39.91 as of September 30, 2015 from P=35.55 as of December 31, The Group s cash requirements have been mainly sourced through cash flow from operations and from borrowings. Net cash from operating activities amounted to P9.325 billion. As of September 30, 2015, net cash used in investing activities amounted to P8.254 billion which included payments in connection with the purchase of aircraft. Net cash used in financing activities amounted to P million which comprised of proceeds from long-term debt of P4.781 billion net of repayments of long-term debt amounting to P4.405 billion and payment of dividends to shareholders of P million. As of September 30, 2015, except as otherwise disclosed in the financial statements and to the best of the Group s knowledge and belief, there are no events that will trigger direct or contingent financial obligation that is material to the Group, including any default or acceleration of an obligation.

8 - 8 - Financial Ratios The following are the major financial ratios that the Group monitors in measuring and analyzing its financial performance: Liquidity and Capital Structure Ratios September 30, 2015 December 31, 2014 Current Ratio 0.35:1 0.35:1 Debt-to-Equity Ratio 1.48:1 1.57:1 Asset-to-Equity Ratio 3.36:1 3.53:1 Interest Coverage Ratio 8.93:1 4.10:1 Profitability Ratios September 30, 2015 September 30, 2014 Return on Asset 4.5% 3.0% Return on Equity 15.6% 9.5% Return on Sales 8.4% 5.4% Material Changes in the 2015 Financial Statements (Increase/Decrease of 5% or more versus 2014) Material changes in the Statements of Consolidated Comprehensive Income were explained in detail in the management s discussion and analysis of financial condition and results of operations stated above. Consolidated Statements of Financial Position September 30, 2015 versus December 31, % increase in Cash and Cash Equivalents Due to collections as a result of the expansion of the Group s operations as evidenced by 9.9% growth in revenues. 16.3% decrease in Receivables Due to collection of various trade receivables and settlement receivable from Roar II. 24.7% increase in Expendable Parts, Fuel, Materials and Supplies Due to a higher level of fuel inventory with the opening of a new depot and increased volume of materials and supplies relative to the larger fleet size during the period. 7.6% decrease in Other Current Assets Due to liquidation of advances to supplier for purchase of Airbus A330 aircraft spare engine. 6.4% increase in Property and Equipment Due to the acquisition of three Airbus A320 aircraft during the period. 8.7% decrease in Investment in Joint Ventures Due to the share in net loss of PAAT and SIAEP incurred during the period % increase in Deferred Tax Assets-net Due mainly to the recognition of deferred tax benefits for future deductible amounts such as unrealized foreign exchange and hedging losses.

9 % increase in Other Noncurrent Assets Due to the payment of commitment fees for the 16 ATR aircraft ordered by the Group which are due for delivery starting % increase in Accounts Payable and Other Accrued Liabilities Due to increase in trade payables and accruals of certain operating expenses as a result of the increased flight and passenger activity during the period. 4.6% decrease in Due to Related Parties Due to payments of payables on purchases made from related parties. 5.7% increase in Unearned Transportation Revenue Due to more forward bookings as of September 30, 2015 compared to December 31, % decrease in Financial Liabilities at fair value through profit or loss Due to the settlement of certain fuel derivative contracts with counterparties. 5.7% increase in Long-Term Debt (including Current Portion) Due to additional loans availed to finance the purchase of three Airbus A320 aircraft acquired during the period partially offset by the repayment of certain outstanding long-term debt in accordance with the repayment schedule. 26.9% decrease in Income Tax Payable Due to lower income tax due for the third quarter of 2015 in excess of available creditable withholding tax % decrease in Deferred Tax Liabilities-net Net balance for the current period resulted to a deferred tax asset. 17.8% increase in Other Noncurrent Liabilities Due to the accretion of asset retirement obligation and accrual for pension liability made during the period. 20.1% increase in Retained Earnings Due to net income during the period net of dividends declared and paid to stockholders. As of September 30, 2015, there are no significant elements of income that did not arise from the Group s continuing operations. The Group generally records higher domestic revenue in January, March, April, May and December as festivals and school holidays in the Philippines increase the Group s seat load factors in these periods. Accordingly, the Group s revenue is relatively lower in July to September due to decreased domestic travel during these months. Any prolonged disruption in the Group s operations during such peak periods could materially affect its financial condition and/or results of operations.

10 KEY PERFORMANCE INDICATORS The Group sets certain performance measures to gauge its operating performance periodically and to assess its overall state of corporate health. Listed below are major performance measures, which the Group has identified as reliable performance indicators. Analyses are employed by comparisons and measurements based on the financial data as of September 30, 2015 and December 31, 2014 and for nine months ended September 30, 2015 and 2014: Key Financial Indicators Total Revenue P billion P billion Pre-tax Core Net Income P6.313 billion P2.256 billion EBITDAR Margin 33.9% 23.3% Cost per Available Seat Kilometre (ASK) (Php) Cost per ASK (U.S. cents) Seat Load Factor 81.5% 84.2% The manner by which the Group calculates the above key performance indicators for both 2015 and 2014 is as follows: Total Revenue The sum of revenue obtained from the sale of air transportation services for passengers and cargo and ancillary revenue Pre-tax Core Net Income Operating income after deducting net interest expense and adding equity income/loss of joint venture EBITDAR Margin Operating income after adding depreciation and amortization, provision for ARO and aircraft and engine lease expenses divided by total revenue Cost per ASK Operating expenses, including depreciation and amortization expenses and the costs of operating leases, but excluding fuel hedging effects, foreign exchange effects, net financing charges and taxation, divided by ASK Seat Load Factor Total number of passengers divided by the total number of actual seats on actual flights flown As of September 30, 2015, except as otherwise disclosed in the financial statements and to the best of the Group s knowledge and belief, there are no known trends, demands, commitments, events or uncertainties that may have a material impact on the Group s liquidity. As of September 30, 2015 except as otherwise disclosed in the financial statements and to the best of the Group s knowledge and belief, there are no events that would have a material adverse impact on the Group s net sales, revenues and income from operations and future operations.

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12 CEBU AIR, INC. AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION AS OF SEPTEMBER 30, 2015 (With Comparative Audited Figures as of December 31, 2014) September 30, 2015 (Unaudited) December 31, 2014 (Audited) ASSETS Current Assets Cash and cash equivalents (Note 8) P=4,584,032,297 P=3,963,912,683 Receivables (Note 10) 1,559,834,435 1,862,718,419 Expendable parts, fuel, materials and supplies (Note 11) 847,121, ,315,070 Other current assets (Note 12) 1,866,691,716 2,020,471,923 Total Current Assets 8,857,679,823 8,526,418,095 Noncurrent Assets Property and equipment (Notes 13, 17, 28 and 29) 69,426,861,476 65,227,125,368 Investment in joint ventures (Note 14) 539,668, ,339,486 Deferred tax assets-net 569,469,300 Goodwill (Notes 7 and 15) 566,781, ,781,533 Other noncurrent assets (Notes 7 and 16) 1,217,257,534 1,150,594,326 Total Noncurrent Assets 72,320,038,791 67,535,840,713 P=81,177,718,614 P=76,062,258,808 LIABILITIES AND EQUITY Current Liabilities Accounts payable and other accrued liabilities (Note 17) P=10,968,711,217 P=10,668,437,651 Unearned transportation revenue (Note 4 and 5) 6,736,618,393 6,373,744,740 Current portion of long-term debt (Notes 13 and 18) 5,204,419,184 4,712,465,291 Financial liabilities at fair value through profit or loss (Note 9) 2,064,300,888 2,260,559,896 Due to related parties (Note 26) 38,066,783 39,909,503 Income tax payable 4,264,445 5,831,638 Total Current Liabilities 25,016,380,910 24,060,948,719 Noncurrent Liabilities Long-term debt - net of current portion (Notes 13 and 18) 30,566,851,454 29,137,197,374 Deferred tax liabilities-net 129,160,379 Other noncurrent liabilities (Notes 19 and 24) 1,408,588,290 1,196,148,149 Total Noncurrent Liabilities 31,975,439,744 30,462,505,902 Total Liabilities 56,991,820,654 54,523,454,621 Equity (Note 20) Common stock 613,236, ,236,550 Capital paid in excess of par value 8,405,568,120 8,405,568,120 Treasury stock (529,319,321) (529,319,321) Other comprehensive loss (Note 24) (131,968,292) (131,968,292) Retained earnings 15,828,380,903 13,181,287,130 Total Equity 24,185,897,960 21,538,804,187 P=81,177,718,614 P=76,062,258,808 See accompanying Notes to Unaudited Consolidated Financial Statements.

13 CEBU AIR, INC. AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2015 AND 2014 Quarters Ended Nine Months Ended REVENUES Sale of air transportation services (Note 4) Passenger P=9,312,567,849 P=8,872,953,084 P=32,125,929,192 P=29,724,677,413 Cargo 886,496, ,594,420 2,487,624,435 2,258,089,463 Ancillary revenues (Note 20) 2,553,730,177 2,034,794,343 7,645,251,453 6,462,754,688 12,752,794,309 11,728,341,847 42,258,805,080 38,445,521,564 EXPENSES Flying operations (Note 20) 5,188,443,589 6,511,453,020 15,996,711,918 19,608,901,004 Aircraft and traffic servicing (Note 20) 1,497,310,128 1,166,851,841 4,275,605,390 3,496,582,299 Repairs and maintenance (Note 20) 1,374,252,121 1,075,179,811 3,914,679,343 3,354,670,900 Depreciation and amortization 1,287,479,382 1,086,555,088 3,756,913,197 3,137,637,410 Aircraft and engine lease (Note 26) 1,023,754, ,049,472 2,965,588,778 2,597,432,002 Reservation and sales 624,890, ,960,742 1,992,792,901 1,599,070,604 General and administrative (Note 21) 378,310, ,483,138 1,206,701, ,115,347 Passenger service 381,247, ,180,024 1,114,686, ,686,918 11,755,687,265 11,835,713,136 35,223,680,112 35,591,096,484 OPERATING INCOME 997,107,044 (107,371,289) 7,035,124,968 2,854,425,080 OTHER INCOME (EXPENSE) Interest expense (Notes 16 and 17) (270,263,935) (244,725,930) (787,569,121) (754,946,025) Foreign exchange gains (losses) (1,365,610,300) (910,979,459) (1,725,399,034) (193,204,864) Hedging gains (losses) (Note 8) (1,580,339,445) (184,630,961) (1,559,822,954) (148,895,980) Loss on sale of aircraft (Note 13 and 29) (77,996,392) (77,996,392) Interest income (Notes 7 and 8) 18,690,855 14,973,905 66,384,763 68,006,574 Equity in net income of joint venture (Note 13) 10,567,937 11,652,286 (1,103,539) 88,196,524 (3,264,951,280) (1,313,710,159) (4,085,506,277) (940,843,771) INCOME (LOSS) BEFORE INCOME TAX (2,267,844,236) (1,421,081,448) 2,949,618,691 1,913,581,309 PROVISION FOR (BENEFIT FROM) INCOME TAX (622,592,390) (322,520,769) (606,405,077) (165,679,584) NET INCOME (LOSS) (P=1,645,251,846) (P=1,098,560,679) P=3,556,023,768 P=2,079,260,893 Basic/Diluted Earnings (Loss) Per Share (Note 24) P=5.87 P=3.43 See accompanying Notes to Unaudited Consolidated Financial Statements.

14 CEBU AIR, INC. AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2015 (With Comparative Unaudited Figures as of September 30, 2014) Capital Paid in Excess of Par Value (Note 20) For the Nine Months Ended September 30, 2015 Other Appropriated Comprehensive Retained Loss Earnings (Note 24) (Note 20) Unappropriated Retained Earnings (Note 20) Common Stock (Note 20) Treasury Stock (Note 20) Total Equity Balance at January 1, 2015 P=613,236,550 P=8,405,568,120 (P=529,319,321) (P=131,968,292) P=6,916,762,000 P=6,264,525,130 P=21,538,804,187 Net income 3,556,023,768 3,556,023,768 Other comprehensive income Total comprehensive income 3,556,023,768 3,556,023,768 Cash dividends paid (908,929,995) (908,929,995) Balance at September 30, 2015 P=613,236,550 P=8,405,568,120 (P=529,319,321) (P=131,968,292) P=6,916,762,000 P=8,911,618,903 P=24,185,897,960 Capital Paid in Excess of Par Value (Note 20) For the Nine Months Ended September 30, 2014 Other Comprehensive Loss (Note 20) Appropriated Retained Earnings (Note 20) Unappropriated Retained Earnings (Note 20) Common Stock (Note 20) Treasury Stock (Note 20) Total Equity Balance at January 1, 2014 P=613,236,550 P=8,405,568,120 (P=529,319,321) (P=341,650,278) P=3,916,762,000 P=9,016,980,244 P=21,081,577,315 Net income 2,079,260,893 2,079,260,893 Other comprehensive income Total comprehensive income 2,079,260,893 2,079,260,893 Cash dividends paid (605,953,330) (605,953,330) Balance at September 30, 2014 P=613,236,550 P=8,405,568,120 (P=529,319,321) (P=341,650,278) P=3,916,762,000 P=10,490,287,807 P=22,554,884,878 See accompanying Notes to Unaudited Consolidated Financial Statements.

15 CEBU AIR, INC. AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2015 AND CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax P=2,949,618,691 P=1,913,581,309 Adjustments for: Depreciation and amortization (Note 13) 3,756,913,197 3,137,637,410 Interest expense (Note 18) 787,569, ,946,025 Unrealized foreign exchange (gains) losses 1,466,777, ,157,706 Provision for return cost (Note 19) 558,925, ,013,147 Hedging (gains) losses (Note 9) 1,559,822, ,895,980 Equity in net income of joint ventures (Note 14) 1,103,539 (88,196,524) Loss on sale of aircraft (Note 13 and 29) 77,996,392 Interest income (Note 8) (66,384,763) (68,006,574) Operating income before working capital changes 11,092,341,851 6,410,028,479 Decrease (increase) in: Receivables 316,462, ,788,112 Other current assets 118,387,328 (75,368,455) Expendable parts, fuel, materials and supplies (167,806,305) 64,726,579 Financial assets at fair value through profit or loss (derivatives) (Note 9) (1,756,081,962) 199,657,518 Increase (decrease) in: Accounts payable and other accrued liabilities 545,657,433 (1,474,990,102) Unearned transportation revenue 362,873, ,777,626 Due to related parties (1,842,720) (10,325,600) Noncurrent liabilities (346,485,257) (1,334,867,770) Net cash generated from operations 10,163,506,995 4,885,426,387 Interest paid (852,099,021) (813,882,856) Interest received 66,597,865 72,720,682 Income taxes paid (52,574,700) (39,831,938) Net cash provided by operating activities 9,325,431,139 4,104,432,275 CASH FLOWS FROM INVESTING ACTIVITIES Investment in subsidiary (Note 7) (488,559,147) Decrease in other noncurrent assets (66,663,207) (10,957,665) Acquisition of property and equipment (Notes 13 and 29) (8,718,820,000) (8,823,196,794) Proceeds from sale of aircraft 480,908,701 Dividends received from a joint venture 50,566,999 58,667,741 Net cash used in investing activities (8,254,007,507) (9,264,045,865) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from long-term debt 4,781,375,200 5,515,630,015 Repayments of long-term debt (4,405,113,093) (3,276,569,469) Dividends paid (908,929,995) (605,953,330) Net cash (used in) provided by financing activities (532,667,888) 1,633,107,216 EFFECTS OF EXCHANGE RATE CHANGES IN CASH AND CASH EQUIVALENTS 81,363,870 6,651,934 NET INCREASE IN CASH AND CASH EQUIVALENTS 620,119,614 (3,519,854,440) CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 3,963,912,683 6,315,947,866 CASH AND CASH EQUIVALENTS AT END OF YEAR (Note 8) P=4,584,032,297 P=2,796,093,426 See accompanying Notes to Unaudited Consolidated Financial Statements.

16 CEBU AIR, INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS 1. Corporate Information Cebu Air, Inc. (the Parent Company) was incorporated and organized in the Philippines on August 26, 1988 to carry on, by means of aircraft of every kind and description, the general business of a private carrier or charter engaged in the transportation of passengers, mail, merchandise and freight, and to acquire, purchase, lease, construct, own, maintain, operate and dispose of airplanes and other aircraft of every kind and description, and also to own, purchase, construct, lease, operate and dispose of hangars, transportation depots, aircraft service stations and agencies, and other objects and service of a similar nature which may be necessary, convenient or useful as an auxiliary to aircraft transportation. The principal place of business of the Parent Company is at 2nd Floor, Doña Juanita Marquez Lim Building, Osmeña Boulevard, Cebu City. The Parent Company has twelve special purpose entities (SPE) that it controls, namely: Cebu Aircraft Leasing Limited (CALL), IBON Leasing Limited (ILL), Boracay Leasing Limited (BLL), Surigao Leasing Limited (SLL), Sharp Aircraft Leasing Limited (SALL), Vector Aircraft Leasing Limited (VALL), Panatag One Aircraft Leasing Limited (POALL), Panatag Two Aircraft Leasing Limited (PTALL), Panatag Three Aircraft Leasing Limited (PTHALL), Summit A Aircraft Leasing Limited (SAALL), Summit B Aircraft Leasing Limited (SBALL) and Summit C Aircraft Leasing Limited (SCALL). CALL, ILL, BLL, SLL, SALL, VALL, POALL, PTALL and PTHALL are SPEs in which the Parent Company does not have equity interest. CALL, ILL, BLL, SLL, SALL, VALL POALL, PTALL, PTHALL, SAALL, SBALL and SCALL acquired the passenger aircraft for lease to the Parent Company under finance lease arrangements (Note 13) and funded the acquisitions through long-term debt (Note 18). On March 20, 2014, the Parent Company acquired 100% ownership of Tiger Airways Philippines (TAP) (Note 7). The Parent Company, its ten SPEs and TAP (collectively known as the Group ) are consolidated for financial reporting purposes (Note 2). The Parent Company s common stock was listed with the Philippine Stock Exchange (PSE) on October 26, 2010, the Parent Company s initial public offering (IPO). The Parent Company s ultimate parent is JG Summit Holdings, Inc. (JGSHI). The Parent Company is 66.15%-owned by CP Air Holdings, Inc. (CPAHI). In 1991, pursuant to Republic Act (RA) No. 7151, the Parent Company was granted a franchise to operate air transportation services, both domestic and international. In August 1997, the Office of the President of the Philippines gave the Parent Company the status of official Philippine carrier to operate international services. In September 2001, the Philippine Civil Aeronautics Board (CAB) issued the permit to operate scheduled international services and a certificate of authority to operate international charters. The Parent Company is registered with the Board of Investments (BOI) as a new operator of air transport on a pioneer and non-pioneer status. Under the terms of the registration and subject to certain requirements, the Parent Company is entitled to certain fiscal and non-fiscal incentives, including among others, an income tax holiday (ITH) for a period of four (4) to six (6) years.

17 Prior to the grant of the ITH and in accordance with the Parent Company s franchise, which extends up to year 2031: a. The Parent Company is subject to franchise tax of five percent (5%) of the gross revenue derived from air transportation operations. For revenue earned from activities other than air transportation, the Parent Company is subject to corporate income tax and to real property tax. b. In the event that any competing individual, partnership or corporation received and enjoyed tax privileges and other favorable terms which tended to place the Parent Company at any disadvantage, then such privileges shall have been deemed by the fact itself of the Parent Company s tax privileges and shall operate equally in favor of the Parent Company. On May 24, 2005, the Reformed-Value Added Tax (R-VAT) law was signed as RA No or the R-VAT Act of The R-VAT law took effect on November 1, 2005 following the approval on October 19, 2005 of Revenue Regulation (RR) No which provides for the implementation of the rules of the R-VAT law. Among the relevant provisions of RA No are the following: a. The franchise tax of the Parent Company is abolished; b. The Parent Company shall be subject to corporate income tax; c. The Parent Company shall remain exempt from any taxes, duties, royalties, registration license, and other fees and charges; d. Change in corporate income tax rate from 32.00% to 35.00% for the next three years effective on November 1, 2005, and 30.00% starting on January 1, 2009 and thereafter; e % cap on the input VAT that can be claimed against output VAT; and f. Increase in the VAT rate imposed on goods and services from 10.00% to 12.00% effective on February 1, On November 21, 2006, the President signed into law RA No. 9361, which amends Section 110 (B) of the Tax Code. This law, which became effective on December 13, 2006, provides that if the input tax, inclusive of the input tax carried over from the previous quarter exceeds the output tax, the excess input tax shall be carried over to the succeeding quarter or quarters. The Department of Finance through the Bureau of Internal Revenue issued RR No to implement the provisions of the said law. Based on the regulation, the amendment shall apply to the quarterly VAT returns to be filed after the effectivity of RA No On December 16, 2008, the Parent Company was registered as a Clark Freeport Zone (CFZ) enterprise and committed to provide air transportation services both domestic and international for passengers and cargoes at the Diosdado Macapagal International Airport. 2. Basis of Preparation The accompanying consolidated financial statements of the Group have been prepared on a historical cost basis, except for financial assets and liabilities at fair value through profit or loss (FVPL) and available-for-sale (AFS) investment that have been measured at fair value. The financial statements of the Group are presented in Philippine Peso (P=), the Parent Company s functional and presentation currency. All amounts are rounded to the nearest peso unless otherwise indicated.

18 Statement of Compliance The consolidated financial statements of the Group have been prepared in compliance with Philippine Financial Reporting Standards (PFRS). The Group has adopted the new and revised accounting standards, which became effective beginning January 1, 2014, in the accompanying financial statements. On March 20, 2014, the Group finalized its acquisition of TAP. The acquisition was accounted for as a business combination (Note 7). Accordingly, the Group finalized the purchase price allocation. Basis of Consolidation The consolidated financial statements as of September 30, 2015 and December 31, 2014 represent the consolidated financial statements of the Parent Company, the SPEs that it controls and its wholly owned subsidiary TAP. Consolidation of TAP started on March 20, 2014 when the Group gained control (Note 7). Control is achieved when the Parent Company is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Parent Company controls an investee if, and only if, the Parent Company has: power over the investee (that is, existing rights that give it the current ability to direct the relevant activities of the investee); exposure, or rights, to variable returns from its involvement with the investee; and the ability to use its power over the investee to affect the amount of the investor's returns When the Parent Company has less than a majority of the voting or similar rights of an investee, the Parent Company considers all relevant facts and circumstances in assessing whether it has power over an investee, including: the contractual arrangement with the other vote holders of the investee; rights arising from other contractual arrangements; and the Parent Company s voting rights and potential voting rights. The Parent Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Parent Company obtains control over the subsidiary and ceases when the Parent Company loses control of the subsidiary. Assets, liabilities, income and expenses of the a subsidiary acquired or disposed of during the year are included in the consolidated statement of comprehensive income from the date the Parent Company gains control until the date the Parent Company ceases to control the subsidiary. Profit or loss and each component of other comprehensive income (OCI) are attributed to the equity holders of the Parent Company of the Group and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance. The financial statements of the subsidiaries are prepared for the same balance sheet date as the Parent Company, using consistent accounting policies. All intragroup assets, liabilities, equity, income and expenses and cash flows relating to transactions between members of the Group are eliminated on consolidation.

19 A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the Parent Company loses control over a subsidiary, it: Derecognizes the assets (including goodwill) and liabilities of the subsidiary; Derecognizes the carrying amount of any non-controlling interests; Derecognizes the cumulative translation adjustments recorded in equity; Recognizes the fair value of the consideration received; Recognizes the fair value of any investment retained; Recognizes any surplus or deficit in profit or loss; and Reclassifies the Parent Company s share of components previously recognized in OCI to profit or loss or retained earnings, as appropriate, as would be required if the Parent Company had directly disposed of the related assets and liabilities. The consolidated financial statements are prepared using uniform accounting policies for like transactions and other events in similar circumstances. All significant intercompany transactions and balances, including intercompany profits and unrealized profits and losses, are eliminated in the consolidation. 3. Changes in Accounting Policies The accounting policies adopted are consistent with those of the previous financial year, except for the adoption of new and amended PFRS and Philippine Interpretations from International Financial Reporting Interpretations Committee (IFRIC) that are discussed below. Except as otherwise indicated, the adoption of the new and amended PFRS and Philippine Interpretations did not have any effect on the consolidated financial statements of the Group. Investment Entities (Amendments to PFRS 10, Consolidated Financial Statements, PFRS 12, Disclosure of Interests in Other Entities, and PAS 27, Separate Financial Statements) These amendments provide an exception to the consolidation requirement for entities that meet the definition of an investment entity under PFRS 10. The exception to consolidation requires investment entities to account for subsidiaries at fair value through profit or loss. The amendments must be applied retrospectively, subject to certain transition relief. The amendments have no impact on the Group s financial position or performance. PAS 32, Financial Instruments: Presentation - Offsetting Financial Assets and Financial Liabilities These amendments clarify the meaning of currently has a legally enforceable right to set-off and the criteria for non-simultaneous settlement mechanisms of clearing houses to qualify for offsetting and are applied retrospectively. The amendments affect disclosure only and have no impact on the Group s financial position or performance. PAS 36, Impairment of Assets - Recoverable Amount Disclosures for Non-Financial Assets (Amendments) These amendments remove the unintended consequences of PFRS 13 on the disclosures required under PAS 36. In addition, these amendments require disclosure of the recoverable amounts for the assets or cash-generating units (CGUs) for which impairment loss has been recognized or reversed during the period. The amendments affect disclosures only and had no impact on the Group s financial position or performance.

20 PAS 39, Financial Instruments: Recognition and Measurement - Novation of Derivatives and Continuation of Hedge Accounting (Amendments) These amendments provide relief from discontinuing hedge accounting when novation of a derivative designated as a hedging instrument meets certain criteria. The amendments have no financial impact on the Group s financial position or performance. Philippine Interpretation IFRIC 21, Levies IFRIC 21 clarifies that an entity recognizes a liability for a levy when the activity that triggers payment, as identified by the relevant legislation, occurs. For a levy that is triggered upon reaching a minimum threshold, the interpretation clarifies that no liability should be anticipated before the specified minimum threshold is reached. This interpretation has no impact on the Group s financial position or performance. Annual Improvements to PFRSs ( cycle) In the annual improvements cycle, seven amendments to six standards were issued, which included an amendment to PFRS 13, Fair Value Measurement. The amendment to PFRS 13 is effective immediately and it clarifies that short-term receivables and payables with no stated interest rates can be measured at invoice amounts when the effect of discounting is immaterial. This amendment has no impact on the Group. Annual Improvements to PFRSs ( cycle) In the annual improvements cycle, four amendments to four standards were issued, which included an amendment to PFRS 1, First-time Adoption of Philippine Financial Reporting Standards-First-time Adoption of PFRS. The amendment to PFRS 1 is effective immediately. It clarifies that an entity may choose to apply either a current standard or a new standard that is not yet mandatory, but permits early application, provided either standard is applied consistently throughout the periods presented in the entity s first PFRS financial statements. This amendment has no impact on the Group as it is not a first-time PFRS adopter. Standards Issued but not yet Effective The Group has not applied the following PFRS and Philippine Interpretations which are not yet effective as of December 31, This list consists of standards and interpretations issued, which the Group reasonably expects to be applicable at a future date. The Group intends to adopt those standards when they become effective. The Group does not expect the adoption of these standards to have a significant impact in the consolidated financial statements, unless otherwise stated. PFRS 9, Financial Instruments - Classification and Measurement (2010 version) PFRS 9 (2010 version) reflects the first phase on the replacement of PAS 39 and applies to the classification and measurement of financial assets and liabilities as defined in PAS 39, Financial Instruments: Recognition and Measurement. PFRS 9 requires all financial assets to be measured at fair value at initial recognition. A debt financial asset may, if the fair value option (FVO) is not invoked, be subsequently measured at amortized cost if it is held within a business model that has the objective to hold the assets to collect the contractual cash flows and its contractual terms give rise, on specified dates, to cash flows that are solely payments of principal and interest on the principal outstanding. All other debt instruments are subsequently measured at fair value through profit or loss. All equity financial assets are measured at fair value either through other comprehensive income (OCI) or profit or loss. Equity financial assets held for trading must be measured at fair value through profit or loss. For FVO liabilities, the amount of change in the fair value of a liability that is attributable to changes in credit risk must be presented in OCI. The remainder of the change in fair value is presented in profit or loss, unless presentation of the fair value change in respect of the liability s credit risk in OCI would create or enlarge an accounting mismatch in profit or loss. All other PAS 39 classification and measurement requirements for financial liabilities have